North Carolina Bill will be ‘Amended’ To Make BTC Businesses Comply

A bill placed before the North Carolina Senate could see the Old North State implement mandatory licensing for companies operating with digital currency.

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A bill placed before the North Carolina Senate could see the Old North State implement mandatory licensing for companies operating with digital currency.

Lawmakers surrounding Bill H289, which passed the House earlier this month, say it is centered on security and consumer protection and aims to ensure companies adhere to know-your-customer (KYC) requirements.

Local publication Citizen-Times cited Banking Commissioner Ray Grace, who called for legislation to be brought forward:

“There’s two sides to the Bitcoin. One side is the clear potential value of the innovation, and what that could portent for the payment system. Since we're a business friendly state, we want to facilitate that [...]. We wanted to mitigate the risk while facilitating the potential benefits down the road.”

The nature of the bill, in contrast to approaches seen in other US states, calls for an amendment to the Money Transmitters Act with Bitcoin businesses being treated as money transmitters. This, opponents say, runs counter to Bitcoin’s status at federal level, where it is currently not legally defined as money.

A protest website, bitcoinregs.org, has been set up for those opposed to sign letters to the state lobbying for a revision of the proposals. Among other arguments, the letters reiterate that Bitcoin is currently classified as property, not money, by the Internal Revenue Service (IRS).

Coinbase praise

In a separate development, Bitcoin processor Coinbase last month issued a blog post supporting North Carolina’s “good” approach, calling it “a state that is promoting innovation and regulatory efficiency into its regulatory framework via the next generation of its Money Transmitters Act…”

The post highlights the increased efficiency of the proposed scheme over New York’s BitLicense, requiring operators to obtain just one license per state if the model were to be adopted at a national level as North Carolina would not generate a separate licensing scheme just for digital currency businesses.

Also supported is clarification of businesses’ right to hold “permissible investments” in digital currency, while Coinbase recognizes the state’s “sensible and flexible framework for consumer protection.”

Nonetheless, with Coinbase having come in for criticism in recent months over its regulatory stance arguably being preserved at a cost to consumer privacy, it is clear that the community and industry remain divided over the US approach to facilitating expansion of digital currency.